sign in sign up
<<
Home , Bharatmala, Cuddalore, Sirkazhi

Executive summary i

Executive summary

Potential for coastline The high variability of transit time impacts development in the trade since exporters are not able to commit to tight delivery schedules and India is richly endowed with natural have to finance higher working capital. maritime advantages, with a 7,500-km coastline covering 13 states and union Adequate road and rail connectivity territories, a strategic location on key linkages to ports have not been developed international trade routes and 14,500 km of in tandem with port development, resulting navigable and potentially navigable in instances of new ports with modern waterways. Maritime logistics has been an facilities being underutilised due to important component of the Indian connectivity bottlenecks. For example, one economy, accounting for 90 per cent of of the factors impeding the utilisation of EXIM trade by volume and 72 per cent by non-major ports of southern is value. More than 1 bn tonnes of cargo was poor connectivity between industrial handled across over 200 ports in FY 2015. centres and ports. Inadequate road and rail linkages through the Western Ghats A robust maritime logistics sector with constrain North Karnataka’s development. modern and efficient port infrastructure can Inadequate focus on developing coastal be a strong catalyst of economic growth. shipping and inland waterways for EXIM trade can become competitive domestic (non-EXIM) logistics has skewed through cost-efficient and timely logistics. the modal mix of with a Coastal and inland waterway transportation disproportionately high share of roadways. is energy efficient, eco-friendly and reduces logistics costs for domestic freight. The siting and master planning of industrial However, the Indian coastline and river clusters and zones (often with high EXIM network has historically remained under- traffic) does not adequately take into leveraged. Despite significantly lower account proximity to ports. The port land costs, water transport accounts for only 6 itself is inadequately utilised for setting up per cent of total freight movement in India industries and manufacturing. Major ports in tonne km terms. Industrial development have 2.71 lakh acre of land, of which 2.35 has not fully utilised the structural lakh acre is underutilised. Raw material advantages of efficient supply chains often travels a large distance from coastal leveraging proximity to coast. areas to the hinterland and then finished products travel back from the hinterland to Logistics costs account for a large part of the coast for exports. This reduces the the Indian non services GDP compared to competitiveness of Indian exports developed nations. EXIM containers in compared to other exporting countries. India travel a distance of 700 to 1,000 km between production centres and ports, Internationally, several ports have been compared to 150 to 300 km in China. Lack successful in generating higher value-add of seamless connectivity across various and jobs inside the port area compared to logistics modes and complexity in the metropolitan area (Exhibit 1). Existing procedures contribute to high variability in policies in India for usage of port land are transit times. As a result, container exports focused on maximising rental yields, rather take 7 to 17 days from the hinterland to than the maximisation of overall economic vessel, compared to 6 days in China. value-add and job creation.

Sagarmala (Ministry of Shipping) ii Executive summary

EXHIBIT 1 Value-addition and job density inside the port area

Port and metropolitan value added per sq km Job density 2009, EUR mn 2009, Number of jobs Port value added per sq km Job density inside port area Metropolitan value added per sq km Average job density metropolitan area 200 1,800 1,600

150 1,400 1,200 1,000 100 800 600 50 400 200 0 0 Rotterdam Hamburg Antwerp Rotterdam Hamburg Antwerp

SOURCE: ―The Competitiveness of Global Port-Cities‖ by OECD

Indian ports are often small, inefficient and addition, some ports like JNPT are lack the draft to accept larger sized congested while others do not have vessels. As a result, no Indian port ranks sufficient cargo. among the global top 20 (Exhibit 2). In

EXHIBIT 2

Comparison of India, China, US on a few port-related KPIs

India China US

Port capacity stock 1 3 10 (% of GDP)

Number of shipyards2 7 70 45

Number of ports in global 0 9 2 top 20

Container traffic 11 185 44 (mn TEU)

Average annual growth 0.5 10 0.4 in container traffic1 (mn TEU)

Contribution of waterways in ~6% 24% 6% domestic transportation3

Average turn-around time 4.5 1 1.2 (Days)

1 Over 2008–2012 2 That can make more than 120 mts long ships 3 Includes both Coastal Shipping and Inland Waterways

SOURCE: Expert discussion; World Bank; Lloyd’s list; OECD; Port technology; Clarksons

Sagarmala (Ministry of Shipping) Executive summary iii

Port-led development adequate linkages to ports are important opportunity for India factors industry to be competitive. The opportunity from pursuing port-led Industrialisation positively impacts per development is immense in India, as capita income and hence the prosperity of evident from a comparative analysis with the region. However, for industrialisation to China (Exhibit 3). China leads India by a be competitive, it needs to have effective factor of seven times to 16 times on the and efficient logistics. Proximity and/or measured parameters.

EXHIBIT 3

Comparative impact of port-led development on economies of India and China India China China/India

Land mass (mn sq km) 3.3 9.6 3X Size GDP (USD trillion) 1.9 9.2 5X

Cost of energy 19 11 -42% (cents/kWh) Electricity production 1,000 5,000 Energy 5X (bn kWh) Petchem crackers 07 46 7X (number) Port-led Steel production 87 823 10X develop- (mn tonne) ment Materials Cement production 280 2,480 9X (mn tonne)

Container traffic 11 174 16X Discrete (mn TEUs) Mfg Merchandise export 317 2,343 7X (USD bn)

Mobile subscribers 1,000 1,290 1X (mn) Services Internet subscribers 354 659 2X (mn)

The Sagarmala initiative was conceived by harnessing the potential of India’s coastline the to address the and river network. Sagarmala was challenges and capture the opportunity of articulated by the then Prime Minister Shri port-led development comprehensively and in 2003 and holistically. Sagarmala is a national announced by the Prime Minister Shri programme aimed at accelerating in 2014. It was approved by economic development in the country by the Union Cabinet in March 2015.

Sagarmala (Ministry of Shipping) iv E x e c u tive summary

Sagarmala vision Based on these studies, Sagarmala can aspire to reduce logistics costs for EXIM ―The vision of Sagarmala is to reduce and domestic cargo leading to overall cost logistics cost for both domestic and EXIM savings of INR 35,000 to 40,000 cr. Some cargo with minimal infrastructure of this will be direct cost savings, while investment.‖ Studies under Sagarmala others are savings from inventory-handling have identified opportunities for reducing costs resulting from time (and reduced overall logistics costs, thereby improving variability) in transportation of goods, the overall efficiency of the economy and particularly containers. These cost savings increasing competitiveness of exports. apply to current industrial capacities as well A multi-modal logistics optimisation model as future coast proximate capacities for has been developed to identify the most energy, material, marine and discrete optimal mode of evacuation to/from ports industries that could come up through port- for both EXIM and domestic cargo. The linked industrialisation. Four main model suggests substantial opportunities strategies have been identified for for logistics optimisation. achieving the overall vision of logistics cost-reduction (Exhibit 4), and their impact is depicted in Exhibit 5. EXHIBIT 4 Sagarmala vision

Reducing the cost of Lowering logistics cost of transporting domestic cargo bulk commodities by locating through optimising modal Reduction of future industrial capacities mix logistics cost near the coast for EXIM and domestic trade with minimal Improving export infrastructure competitiveness by Optimising time/cost of EXIM investment developing port proximate container movement discrete manufacturing clusters

Sagarmala (Ministry of Shipping) Executive summary v

EXHIBIT 5

Impact from Sagarmala – 2025

Share of waterways – inland INR 4 lakh Infrastructure investment Double and coastal – in modal mix cr mobilisation from 6%

INR 35,000– Logistics cost saving per USD 110 bn Boost to exports 40,000 cr1 annum

New direct jobs, and 60 lakh 40 lakh indirect jobs

1 Savings from coastal shipping of coal – 17,000 to 18,000 Cr Savings from coastal shipping of steel, cement, food grains and fertilisers - 11,500 to 13,500 Cr Savings from modal shift and time and variability reduction of containers - 7,000 to 9,000 Cr

1. Reducing the cost of transporting from Mahanadi Coalfields by railways, but domestic cargo through optimising could save significantly by taking coal on modal mix1 the rail-sea-rail (RSR) route. It is estimated that 100 to 130 mn tonnes of coal could The cost per tonne kilometre of moving move through the RSR route to these cargo by sea or inland waterway routes can plants by 2020, resulting in annual savings be 60 to 80 per cent lower than by road or of over INR 10,000 cr to the power sector. rail. However the modal share of coastal In addition, up to 50 mn tonnes could be shipping and inland waterways remains moved coastally for non-power thermal low. Several production and demand coal users (for example, cement, steel, centres in India lie close to the coastline aluminium plants). This increases further in and rivers, yet the waterways are 2025 (Exhibit 6). Other commodities such underutilised. The study found significant as steel, cement, fertilisers and food grains potential for moving raw materials and could also be moved coastally to the extent finished products between these centres of about 60 mn tonnes by 2025. Further, using coastal shipping and inland about 20 mn tonnes of petroleum products waterways instead of rail or road. could be moved coastally from refineries in and Odisha to demand centres in For example, coastal shipping can play a and Andhra Pradesh. significant role in lowering the delivered cost of domestic thermal coal. It is In addition, an estimated 60 to 70 mn estimated that for power plants located 800 tonnes of cargo can also be moved over to 1,000 km away from coal mines, the cost inland waterways (with focus on NW1, of coal logistics can contribute up to 35 per NW2, NW4 and NW5) by 2025. cent of the cost of power at the bus bar. Coastal power plants in Andhra Pradesh The change in modal mix could also lead of and Karnataka are currently receiving coal emission savings of about 3.5 per cent of total freight sector emissions.

1 Detailed methodology and sources in the subsequent chapters

Sagarmala (Ministry of Shipping) vi Executive summary

EXHIBIT 6

Coastal shipping potential by 2025 Optimistic case Base case

Domestic shipping opportunity by 2025

MMTPA, 2025 12 330-420 10-40 12

30 12-22 10 90 10 35-45 12 10

35 250-300

50 329

250

Thermal Coal POL Iron ore & steel Cement Others Total

Current coastal cargo volume – 80 MTPA

2. Lowering logistics costs of bulk and free up over 2 to 2.5 lakh rail-rake commodities by locating future days. industrial capacities near the coast Unlocking the full potential of coastal For industries in which logistics costs of shipping in India would require the bulk raw materials, intermediates or execution of a set of coordinated projects finished goods form a significant across multiple stakeholders. For example, component of the cost of goods sold, for realising the potential of coastal locating future capacities at or near coastal shipping of coal, required projects include locations could be a lever for designing expansion of port capacity in efficient supply chains. Some examples of Paradip/Dhamra, expansion of railway such industries include oil refining capacity connecting Talcher/Ib Valley to (especially in India where 75 to 80 per cent Odisha ports and creation of end-to-end of crude oil is imported), power, logistics service providers. cement/clinker, steel (and raw materials like pellets). Future capacities could be 3. Optimising time/cost of EXIM developed in competitive coastal locations container movement either close to end markets or close to raw material sources. This could reduce the The total cost of EXIM container movement overall logistics costs and eventually the in India is significantly higher compared to cost of the end product. other countries (Exhibit 7). The transit time is highly variable (seven to 17 days), As a result of this, coastal shipping making it difficult for exporters to plan volumes could grow to 5 times of current container logistics and to commit to tight levels to about 330 to 420 mn tonnes by deadlines to their customers. The high 2025. This would save logistics costs of transit time results in higher levels of about INR 23,000 to 25,000 cr per annum inventory along the supply chain. Some of

Sagarmala (Ministry of Shipping) Executive summary vii

the root causes of sub-optimal container ■ Complicated and time consuming movement include: procedures for customs and interstate border formalities ■ Skewed modal mix: Container movement of above 500 km by road ■ Infrastructure bottlenecks at ports, instead of railways. Road has more roads and Inland Container Depots than 80 per cent share of traffic while (ICDs) resulting in overall lower speed railways has less than 20 per cent of transit share

EXHIBIT 7

Comparison of end-to-end time of transporting a container BOTTOM UP ANALYSIS in India and China by road on similar routes FOR ROAD TIME Days/TEU

India ▪ Length of route = 1,400 km ▪ Avg. distance covered in a day = 200–250 km

7.1–17.0 . Indian containers can 1.0–5.0 take 1.5x more time than 0.1–3.0 Chinese containers with 3.0–4.0 1.0–1.5 1.5–2.5 the time being highly 0.5–1.0 variable due to − Lack of automation China ▪ Length of route = 1,400 km of customs process ▪ Avg. distance covered in a day = 350–400 km − Lower speed of trucks − Congestion and inefficiencies at ports

5.6–6.6 0.5 2.0–3.0 2.0 0.1 0.5 0.5

Engine Non- Tax/toll Custom CFS Yard to Total time engine stop- clearance to yard vessel inland time pages logistics

1 Ocean distance = 6,658 NM

SOURCE: InterviewsExpert discussions with Truck companies, CTOs, Freight forwarders, Importers, Exporters, Port management; World Bank

Sagarmala (Ministry of Shipping) viii Executive summary

Optimising time and cost for transporting connectivity through building spur lines export containers would improve the connecting additional ports in Gujarat competitiveness of exports. A total of five and Maharashtra days of export time and an average cost of INR 1,000 to 1,500 per container can be ■ Expressways in select high volume saved on container exports. The range of road corridors actions to realise this opportunity include: ■ Greater automation and streamlining of ■ Increasing modal share of railways from clearance procedures current 18 per cent to at least 25 per cent through rationalisation of railway freight ■ Creation of additional multimodal rates (Exhibit 8), to make rail movement logistics hubs and ICDs economical relative to road movement for longer lead distances ■ Milk run railway services of container trains between ICDs. ■ Extending the reach of Western Dedicated Freight Corridor (DFC)

EXHIBIT 8

Sagarmala could help in optimising India’s modal mix

India’s modal mix

bn tonne km; percent

Pipelines 7 7 400 MTPA of coastal and Coastal and 6 12 60–70 MTPA of inland Inland waterways waterways Rail 33 35 Share in container traffic increased to 25% from 18% in base case

Road 54 46

2015 2025 with Sagarmala initiatives

4. Improving export competitiveness International experience suggests that by developing port proximate India can leverage export-oriented/import- discrete manufacturing clusters substituting discrete manufacturing for creating economic activity in coastal areas. The weighted average of distance between Port-based or port-proximate the manufacturing hinterlands and the port manufacturing can play a pivotal role in for India is 700 to 800 km compared to 150 supporting this initiative. This study to 300 km in China. Even though India identified focus sectors for port-based or fares better than China in transportation port-proximate manufacturing. Six cost for a comparable distance, the longer sectors—electronics, furniture, automotive, hinterland to port distance leads to higher apparel, leather and footwear and food costs for exporting/importing a container in processing—offer high potential. These India. sectors can have strong port linkages in terms of value-to-weight ratio and time sensitivity.

Sagarmala (Ministry of Shipping) Executive summary ix

Projects identified under the above four components—logistics Sagarmala intensive industries, efficient ports, seamless connectivity and requisite skill The concept of ―port-led development‖ is base—leads to unlocking economic value. central to the Sagarmala vision. Port-led development focuses on logistics-intensive The Sagarmala National Perspective Plan industries (where transportation either (NPP) has identified a range of projects represents a high proportion of costs, or and enablers under these four pillars, timely logistics is a critical success factor). which can unlock the opportunities for port- These industries can be structurally led development (Exhibit 9). The rest of this competitive if developed proximate to section summarises the key findings and coast/waterways. They would be supported projects associated with each pillar. Over by efficient and modern port infrastructure 150 projects have been identified across and seamless multi-modal connectivity. The these four pillars. Executing these projects population in adjoining areas would be could mobilise an investment of INR 4 lakh sufficiently skilled to participate in the cr in the infrastructure sector. An additional economic opportunities on offer. The investment of INR 7 to 8 lakh cr could be in synergistic and coordinated development of the industrial and manufacturing sectors.

EXHIBIT 9

Sagarmala: Port-led development

Port-led development

Port Port Port-led Coastal community modernisation connectivity industrialisation development ▪ Port efficiency ▪ Coastal and inland ▪ 14 Coastal ▪ Skill development improvement waterway projects Economic Zones ▪ Uplifting fishermen ▪ 40+ capacity ▪ Port and industrial ▪ 12 high potential and other local enhancement connectivity industries (across communities projects at major energy, materials – 80+ ▪ Island ports and discrete) connectivity development ▪ 6-8 new ports projects – 7 dry ports

150+ projects INR 4 lakh crore infrastructure investment

Sagarmala (Ministry of Shipping) x Executive summary

1. Port modernisation: Build port with 12 major ports and around 200 notified capacity with world-class quality non-major ports (Exhibit 10). The ports are and right quantity important intermodal units, acting as the interchange point for two modes — sea Increasing port efficiency facilitates trade. and land (Exhibit 11). India has a coastline of around 7,517 km

EXHIBIT 10

Prominent ports of India

Kandla Mundra Sikka Dahej Haldia Hazira Dhamra Pipavav Paradip Gopalpur JNPT Vizag Dighi Gangavaram Jaigarh Kakinada Mormugao Krishnapatnam Katupalli Ennore NMPT

Karaikal Cochin Major port Non-major port Tuticorin

SOURCE: IPA

Sagarmala (Ministry of Shipping) Executive summary xi

EXHIBIT 11

Traffic handled at Indian ports

Traffic handled at Indian ports MTPA, 2014–15 Sikka 125 Mundra 110 Kandla 93 Paradip 71 JNPT 64 Mumbai 62 Vizag 58 Chennai 53 Krishnapatnam 40 NMPT 37 Tuticorin 32 HDS 31 Ennore 30 Cochin 22 Gangavaram 20 KoPT 15 Dhamra 15 Kakinada 15 Mormugao 15 Pipavav 10 Others 135

SOURCE: IPA

Indian ports are generally small—most lack m. Around 25 per cent of India’s container the necessary draft to handle the largest cargo is transshipped through international (cape sized) vessels. The average size of a transshipment ports. container vessel calling at Indian ports is around 5,000 TEUs2 while for China it is In 2014–15, Indian ports handled ~1,050 around 12,000 TEUs. At JNPT—India’s MTPA of cargo, growing at a rate of 4.5 per biggest container port—draft is 14 m while cent per annum. Western coast ports a cape size vessel requires upwards of 16 handle more than 60 per cent of the total cargo owing to the large northwest hinterland (Exhibit 12). 2 Ports data

Sagarmala (Ministry of Shipping) xii Executive summary

EXHIBIT 12

State-wise cargo traffic in 2015

Traffic at major and non-major ports MTPA Northern hinterland 428 handled by Gujarat

281

153 141 116 86 147 37 46 15 22

Gujarat Maha- Goa Karnataka Kerala Tamil Andhra Odisha West rashtra Nadu Pradesh Bengal

SOURCE: Updated basic port statistics

Projected cargo volume at Indian ports by the cargo and port capacity projections is in 2025 is estimated at 2,500 mn MTPA the details of the NPP. (Exhibit 13). The detailed methodology for

EXHIBIT 13

Cargo volume growth at Indian ports by commodities MTPA

2025

Commodity 2014 Base Optimistic Total

POL 351 460 80 540

Coal 231 850 128 978

Containers 115 323 53 375

Others 275 527 80 607

Total1 972 2,160 341 2,500

1 Numbers may not add up due to rounding

Sagarmala (Ministry of Shipping) Executive summary xiii

Much of the growth may come from coastal shipping can increase five times, taking its shipping of bulk commodities. While EXIM share in port traffic from the current 15 per cargo will double over the next decade to cent to over 33 per cent (Exhibit 14). ~1,671 MTPA, the share of coastal

EXHIBIT 14

EXIM and domestic shipping cargo growth MTPA

2025

Commodity 2014 Base Optimistic Total

EXIM 820 1,511 161 1,671

Domestic shipping 150 649 180 829

Total 970 2,160 341 2,500

Catering to the increasing traffic over the ■ Increasing capacity at existing major next 10 years will require augmenting ports through mechanisation and capacity. Cargo traffic at the ports is building new terminals expected to be 1,650 MTPA in 2020 and reach 2,500 MTPA by 2025. ■ Increasing capacity at existing non- major ports through mechanisation and To cater to this demand, the ports will need building new terminals to create additional capacity (Exhibit 15) by: ■ Building six to eight greenfield ports.

■ Unlocking 100 MTPA capacity at existing terminals of major ports through improved efficiency

Sagarmala (Ministry of Shipping) xiv Executive summary

EXHIBIT 15

Capacity build up at the ports to meet the 2025 demand

Capacity build up at Indian ports MTPA, 2025 466 3,000+

380

220 320

100 1,550

Existing Major ports Ongoing Additional Capacity New ports Future FY’15 efficiency expansion at capacity from expansion FY’25 capacity improvement major ports masterplan at non- capacity projects in major ports major ports

More than total capacity, it is critical to have adequate capacity at the right place

New ports could potentially be created at potential has been identified for new ports Sagar in , Paradip Outer to come up in central Andhra Pradesh, Harbour in Odisha, Enayam in Tamil Nadu south-eastern Tamil Nadu, and possibly and Vadhavan in Maharashtra. In addition, northern Karnataka (Exhibit 16).

Sagarmala (Ministry of Shipping) Executive summary xv

EXHIBIT 16

6-8 potential new ports based on three themes have been identified that could add upto 400 MTPA

Three themes for identifying new port locations New port locations

▪ Vadhavan - JNPT (handling ~40% Existing regions with ports of container traffic) is saturated and Existing port saturation requires a satellite port Long coastline without a port International trade capture ▪ Paradip outer harbour - To handle Port saturation 150-200 MTPA of coastal shipping of coal for power plants in Southern and Western India

▪ Sagar – Handle overflow traffic of Kolkata and bulk traffic from Hadia Sagar Paradip south ▪ Machilipatnam/Vodarevu – Vadhavan satellite port Potential for facilitation of cargo including thermal coal, cement and Unavailability containers of ports Machilipatnam ▪ / – Facilitate cargo movement of thermal coal Belekeri Vodarevu

Cuddalore ▪ Enayam – ~25% of Indian EXIM container traffic is transshipped via Sirkazhi Strategic ports Colombo and Singapore to capture international Vizhinjam Enayam opportunity ▪ Potential for a mega transshipment port to capture the opportunity

As part of Sagarmala, detailed masterplans and capacity expansion projects have been have been developed for all major ports identified (Exhibit 17).

EXHIBIT 17

Capacity expansion plan at major ports

Capacity expansion at major ports

Additional Existing capacity from Capacity Ongoing Master Plan Capacity S. No. Name (MTPA) expansion projects (MTPA) 1. Kandla 121.4 24.5 55.0 185.9 2. Mumbai 44.5 29.5 4.0 48.5 3. JNPT 79.4 60.0 45.0 124.4 4. Mormugao 43.8 0.0 35.0 78.8 5. Kamarajar(Ennore) 37.0 42.0 3.0 82.0 6. Chennai 86.0 0.0 12.0 98.0 7. V.O. Chidambaranar 44.6 38.9 30.6 75.2 8. New 77.8 6.7 5.5 90.0 9. Cochin 49.7 4.1 2.0 51.7 10. 96.8 38.8 8.0 143.5 11. Paradip 119.8 65.6 10.0 195.4 12. Kolkata Port Trust 70.9 10.8 12.0 82.9 Total capacity (MTPA) 871.5 320.9 222.1 1,414.5

Sagarmala (Ministry of Shipping) xvi Executive summary

2. Connectivity across pipeline, water, rail and road

Port connectivity is the second pillar of the refineries capacity has to be matched by port-led development model under pipeline expansion. With this in mind, Sagarmala. It aspires to provide the most potential pipelines projects have been optimal mode of evacuation to/from ports outlined for capacity enhancement and for both EXIM and domestic cargo. For expansion—expansion of Salaya–Mathura example, the intermodal transportation pipeline, new pipeline from Paradip to network of rail, inland shipping, road, short , etc. sea and pipelines gives the Port of Rotterdam the best possible connections to Freight transportation by waterways is the rest of Europe—transit times to most highly underutilised in the country as destinations is less than 24 hours. Superior compared to the US, China and the EU. connectivity has helped the Port of For example the Yangtze River system is Rotterdam to become the largest sea port one of the most developed inland in Europe handling more than 450 MTPA of waterways navigation systems with 13 cargo. waterways and 92 ports, and generates as much as 20 per cent of China’s GDP. The Providing adequate connectivity to ports is Port of Shanghai is located in the vicinity of a challenge in India. Even modern ports Shanghai, at the confluence of Yangtze, that have world-class equipment can have Huangpu and Qiantang rivers and handled their turnaround times hamstrung because 35 mn TEUs in 20143, most of which of poor connectivity. The main challenges originates in the industrial clusters located to port connectivity are underleveraging of in the Yangtze valley. Similarly in India, domestic waterways, severely constrained NW1, NW2, NW4 and NW5 can be rail infrastructure along key routes, sub- developed to play an important role in optimal modal mix for container freight, cargo movement. poor connectivity to west coast ports through the Western Ghats, lack of Railways is the mainstay for carrying long coordinated end to end planning for bulk lead distance and bulk cargo. Expansion of logistics and constrained last-mile the rail network has not been able to keep connectivity between ports and key up with the growing demand. In the last five industrial hinterlands. years, the rail network has grown at ~0.7 per cent. Most of the routes carrying bulk India's hinterland connectivity is mainly cargo (like thermal coal) are constrained based on road and rail networks with and running at high utilisation. The domestic waterways, both coastal shipping evacuation network in Odisha and and inland routes, playing a limited role. Chhattisgarh is much lower than projected Pipelines are predominantly used for requirement, while the Western Ghats transporting crude oil, refined petroleum hamper connectivity of the ports to the products and natural gas. Chapter 3 of the main rail line. To transport the large detailed National Perspective Plan talks volumes of thermal coal from MCL via about reinventing the modal mix through coastal shipping to coastal power plants in pipelines, waterways, roads and railways. southern India, a heavy haul rail line from Ib Valley/Talcher to Paradip/Dhamra port Pipelines are an effective means of could be developed. Connectivity of transporting liquid cargo to and from ports; Mormugao port to Hospet/Bellary could the cost of transporting the product by also be taken up on priority. Several pipeline could be about 10 to 15 per cent of that by rail. Currently most of the pipelines are operating at utilisation levels of more 3 than 90 per cent; therefore, any increase in Shanghai port

Sagarmala (Ministry of Shipping) Executive summary xvii

specific last-mile connectivity projects like coastal regions through road links. Close to spur lines to connect the ports to DFC, 70 road projects have been identified to connectivity to Dhamra, Gopalpur, improve connectivity to the ports. These Krishnapatnam, Tuticorin ports are needed. include road connectivity of JNPT to industrial hinterland, last-mile connectivity By investing in the short first- and last-mile to ports on the Western Ghats, connectivity rail connectivity projects, a sizeable to new potential port locations like Enayam, investment in point to point rail network can Vadhavan, Sagar, Central Andhra and be avoided. This will also unlock coastal Central Tamil Nadu ports (Exhibit 18). shipping potential of bulk commodities like thermal coal. High freight rates due to Additionally, as part of a logistics efficiency cross-subsidisation and low priority for enhancement programme, multiple goods trains have made the railways initiatives could be explored to improve uneconomical for container movement— India’s logistics performance—logistics shippers prefer moving long distance park development, corridor upgradation, containers also on road. Right pricing of procedural complexity reduction, 3PL railways, last mile connectivity to DFC, service to provide ecosystem development, additional inland container depots, and the etc. prioritisation of container rakes could increase the share of rail in the modal mix Customs procedures at ports could also be of containers and also reduce the transit made more efficient by facilitating online time by five to six days, making Indian submission of documents and forms; trade more competitive. simplifying the process to become an accredited importer/exporter; a specialised Road is economical compared to rail for clearance system for accredited covering distances up to 1,000 km from the importers/exporters; obtaining more port, but the current condition of highway scanning equipment and different treatment stretches is inconsistent. Moreover, the of coastal and EXIM cargo. Indian coastline does not have a coastal road network. To make roads more With the proposed connectivity projects effective as a mode of cargo movement, 10 and initiatives, there can be a significant potential highway stretches have been change in the modal mix of cargo with identified as freight friendly expressways. minimal investment. These connectivity In addition to this, the Government of India projects will require an approximate has undertaken the Bharatmala investment outlay of INR 2 lakh cr. programme which will also help in joining

Sagarmala (Ministry of Shipping) xviii Executive summary

EXHIBIT 18

Main container ports Efficient evacuation network (Example links) Feeder ports FY 25 Trans-shipment port Port industrial cluster National Waterways (NW) Eastern DFC Western DFC Road corridors

Dhandhari Kalan Milk run of ICDs

Dhappar Rail line Panipat Slurry pipeline Tughlakabad Sadiya POL/crude pipeline Allahabad Madhosingh Gwalior Rawtha Kandla Mundra Kolkata/Haldia Keonjhar Ratlam Hazira IB Valley Paradip, Dhamra Pipavav Talcher Vadhavan JNPT Bailadila

Vizag

Hubli Mormugao Central Andhra port

Ankola Krishnapatnam Ennore Mangalore Chennai Cochin Puducherry Central Tamil Nadu port Tuticorin Enayam

3. Port-led industrialisation to support products. Competitive locations for each of these industries have also been shortlisted with the aim to reduce the overall logistics Port-led industrialisation is the third pillar of costs. Other factors of production that the port-led development model. Ports play impact competitiveness like availability of a crucial role in reducing logistics costs and raw material and skills, supporting facilitate export-oriented manufacturing by infrastructure and existing industrial reducing export time and variability. agglomeration have also influenced the Several countries with large coastlines selection of locations. This has been have leveraged ports for aiding aligned with state industrial plans. Similarly, industrialisation. existing and proposed ports have been mapped which can most optimally serve A comprehensive plan for port-led the proposed industrial locations. Major industrialisation has been proposed as part and non-major ports, industrial units and of Sagarmala which combines the growth evacuation infrastructure have hence been potential of specific industries that have linked into a single system at a regional port linkages with the competitive location level through the concept of Coastal for each industry. These locations have Economic Zones (CEZs). also been mapped to the relevant major and non-major ports in the region that can The port-led industrialisation programme most optimally facilitate the movement of will be delivered through the CEZs, which cargo from the industrial locations. will be the focal point for development along India’s coastline. 14 CEZs (Exhibit Twelve major industries covering energy, 19) have been identified along the coastline material and discrete manufacturing have of the country, with each coastal state been identified on the basis of suitability of having one or more CEZs. These CEZs ocean mode of transportation for imports of have been geographically mapped raw materials or exports of finished covering one or more districts, and specific

Sagarmala (Ministry of Shipping) Executive summary xix

industrial clusters relevant for each CEZs of steel and 40 MTPA of new cement have been proposed. capacity can be coastally located by 2025. This will help to save logistics costs by up The industrial clusters within the CEZ fall to INR 1,000 per tonne and make domestic into one of three archetypes of energy, manufacturing more competitive. materials and discrete manufacturing. In each archetype the underlying logic is that Discrete manufacturing: India has set lower cost of movement by waterways can itself a target of boosting exports from USD increase the competitiveness of 465 bn in 2014–15 to USD 900 bn by 2020. manufacturing if located proximate to ports. Merchandise exports would continue a form a significant share of total exports. Discrete Energy clusters: To meet India’s manufacturing clusters aim to support this projected long-term energy needs, three aspiration with strong linkages between coastal power clusters and one to two existing and announced clusters and coastal refinery clusters could be corridors, e.g., Vizag–Chennai Industrial developed by 2025. In addition, there is Corridor being developed by DIPP. Based potential for 3 to 4 new petrochemical on an analysis of global and domestic trade clusters with the target of reducing import flows, India’s competitiveness and linkages dependence through domestic with ports, six discrete manufacturing petrochemical production. sectors (including automotive) can promote port-based/port-proximate manufacturing. Bulk clusters: Similarly in bulk materials These are food processing, automotive, such as steel and cement, Sagarmala has electronics, apparel, leather products and identified the potential for setting up footwear, and furniture. medium to long term incremental capacity in coastal regions. An estimated 40 MTPA

Sagarmala (Ministry of Shipping) xx Executive summary

List of high potential industrial clusters

Invest- Investment Potential Employ- ment in in basic industrial ment Incremental land infrastructure investment potential GDP S No Proposal (INR cr) (INR cr) (INR cr) (lakh) (INR cr) 1 2 refinery and 7,200 1,200 45,000 0.1 20,000 petrochemical clusters 2 4 gas-based 1,500 250 16,000 0.3 5,500 petrochemicals clusters 3 3 coastal power 20,000 3,500 75,000 0.2 15,000 clusters 4 2 steel clusters 18,000 3,000 1,35,000 2.5 80,000

5 2 marine clusters 6,000 1,000 40,000 2.5 10,000

6 2 cement clusters 1,300 200 50,000 0.1 9,000

7 2 food processing 4,300 700 50,000 3 9,000 clusters 8 2 science and 6,000 1,000 1,40,000 7 60,000 technology clusters (electronics, instruments) 9 3 apparel clusters 8,500 1,500 50,000 10 20,000

10 1 automotive 4,000 700 55,000 2.5 25,000 cluster 11 3 leather and 5,000 1,000 25,000 6 13,000 footwear clusters 12 3 furniture clusters 6,000 1,000 60,000 4.5 20,000

Total ~85,000– ~12,000– ~7,00,000– ~40 ~3,00,000 90,000 15,000 8,00,000

Sagarmala (Ministry of Shipping) Executive summary xxi

EXHIBIT 19 Proposed coastal economic zones

Kandla Mundra Kolkata Sikka Dahej Haldia Hazira Dhamra Pipavav Paradip Mumbai Gopalpur JNPT Vizag Dighi Gangavaram Jaigarh Kakinada Mormugao Krishnapatnam Katupalli NMPT Ennore Chennai Major port Non-major port Cochin Proposed CEZ

Tuticorin

Sagarmala (Ministry of Shipping) xxii Executive summary

Each of these CEZs is also mapped to the linkages, potential industries as well as nearby ports. The table below gives details sample projects in the CEZ. of the geographical coverage, port

List of Coastal Economic Zones

Possible CEZ Potential districts Port industries Sample projects

1 Kachchh – Kachchh Kandla, Petrochemicals, LPG import Gujarat Mundra cement, furniture terminals, container and bulk terminals at Kandla port

2 Saurashtra Junagarh, Amreli, Pipavav, Apparel, Connection of – Gujarat Bhavnagar, Sikka automotive western DFC to Pipavav, expressway from Sarkhej to Pipavav 3 Suryapur – , , Dahej, Marine clusters Connection of Gujarat Navsari, Hazira western DFC to Hazira, Ro – Pax Ferry Services between Gogha and Dahej

4 North , , JNPT, Power, Vadhavan port, Konkan – Mumbai, , Mumbai electronics, Expressway from Maharashtra Raigarh apparel Ahmedabad and Dighi to JNPT, terminals in Nhava Creek 5 South Ratnagiri, Dighi, Refining, steel, Upgradation of Konkan – Sindhudurg, North Jaigarh, food processing SH164 to connect Maharashtra Goa, South Goa Mormugao Jaigad port to NH17, Connectivity of NH17 to north and south banks of Dighi port 6 Dakshin Udupi, Dakshin Mangalore Petrochemical Railway line from Kanara – Kannada, Kodagu, Belekeri port to Karnataka Mysore Ankola, food grain and fertiliser handling facility in NMPT 7 Malabar – Ernakulam, Furniture Food grain import Kerala Alappuzha Kollam, terminal, fertiliser Thiruvananthapura bagging facility m

8 Mannar – , Tuticorin Apparel, refining Enayam port, Tamil Nadu , Expressway to Enayam, road to Hare island, container berth at Tuticorin

Sagarmala (Ministry of Shipping) Executive summary xxiii

Possible CEZ Potential districts Port industries Sample projects

9 Poompuhar Cuddalore, Cuddalore Leather Sirkazhi/Cuddalore – Tamil , processing, port, road Nadu , power, refining connectivity to Tiruchirappallu, Cuddalore port , , 10 VCIC South Thiruvallur, Chennai, Petrochemicals, LNG import terminal, – Tamil Chennai, Ennore and electronics, rail link to KPL, MLT- Nadu Kancheepuram Katupalli steel, 2 at Ennore shipbuilding

11 VCIC Chittoor, Krishnapat Electronics Upgradation of road Central – nam connecting Andhra Krishnapatnam port Pradesh to Nellore city, road to Krishnapatnam Port from Naidupeta 12 VCIC North Guntur, Krishna, Vizag, Petrochemicals, Machilipatnam/ – Andhra West Godavari, Kakinada cement, apparel, Vodarevu port, Oil Pradesh East Godavari, food processing jetty at Vizag, road Visakhapatnam, from Machilipatnam Vizianagaram, to NH-SH-46 Srikakulam 13 Kalinga – Puri, Paradip, Petrochemicals, Paradip outer Odisha Jagatsinghapur, Dhamra marine harbour, IWT Cuttack, processing terminal, heavy haul, Kendrapara, LPG import terminal Jajapur, Bhadrak 14 Gaud – Purba Medinipur, Kolkata, Leather Sagar port, ICD, West South twenty Haldia processing LPG import terminal, Bengal Parganas expressway from Durgapur to Haldia

All 14 CEZs come under the influence area 20). It is envisaged that of the 14 CEZs, a of one or more major or non-major ports. few could be taken up as early pilots with The influence area is considered flexible learnings from these replicated across and districts covered under the CEZ could other CEZs. These early pilot CEZs should change. be shortlisted on the basis of availability of large contiguous land parcels, existing These CEZs are also demarcated to align industrial base, access to urbanisation and with the planned industrial corridors (e.g., supporting infrastructure, strong industrial DMIC, VCIC, CBIC, BMEC, AKIC). CEZs potential for high-potential industries, can add over USD 110 bn to Indian availability of deep draft container terminals merchandise exports only through the and strong state support and participation. identified high potential industries (Exhibit

Sagarmala (Ministry of Shipping) xxiv Executive summary

EXHIBIT 20 Sagarmala projects could add USD 110 bn to India’s merchandise exports

Increase in India’s merchandise exports USD bn 110 7 10 11 13

16

32 21

Energy & Electronics Auto Apparel Leather & Furniture Food Total Materials footwear processing

SOURCE: ITC trade map – 2015 base data used for projections

These clusters, put together, could lakh cr to develop the basic infrastructure in generate 40 lakh direct jobs and about 60 the CEZs. The proposed industries would lakh indirect jobs (Exhibit 21). Setting up require an additional industrial investment the manufacturing clusters would require of about INR 7 to 8 lakh cr. an infrastructure investment of about INR 1

Sagarmala (Ministry of Shipping) Executive summary xxv

EXHIBIT 21

40 lakh potential new direct jobs through Sagarmala

# new direct jobs Lakh 40 1 34 5

Total ~1 cr jobs including direct and indirect jobs

Discrete Steel & Others Total manufacturing multiplier clusters

SOURCE: ASI data used for projections

4. Development of coastal communities communities and provide direct and indirect and matching skills with opportunities benefits to the coastal region. An OECD report6 estimates that one tonne of port Approximately 18 per cent of India’s throughput is on an average associated population4 lives in the 72 coastal districts5 with USD 100 of economic value addition, that comprise 12 per cent of India’s and an increase of one million tonnes of mainland. Since these people are critical port throughput is associated with the stakeholders in the Sagarmala generation of 300 new jobs in the port Programme’s ―port-led development‖ region in the short-term. agenda, ensuring their socio-economic well-being is one of the programme’s key A ―Community Development Fund‖ (CDF) is objectives. However, the pace of socio- being created to fund projects and activities economic development among the related to coastal community development maritime states has not been uniform in under Sagarmala. The CDF will fund terms of per capita income, poverty, and projects related to value addition in fisheries, infrastructure. Hence, there is a need for aquaculture, cold chain development, skill holistic and sustainable development of development, local tourism and recreational coastal communities. facilities, etc. which would be beneficial to the livelihoods of the coastal communities. Port-led industrialisation can be the engine The projects considered would be specific of sustainable development of coastal time-bound local interventions not covered under existing central/state government schemes. 4 Census 2011 5 Districts covering all maritime states and union 6 territories; Mumbai City and Mumbai Suburb The Competitiveness of Global Port-Cities: considered as separate districts Synthesis Report, OECD

Sagarmala (Ministry of Shipping) xxvi Executive summary

To ensure sustainable development of Marine fishermen community coastal communities, the environmental development: The marine fisheries sub- and social impact of the projects, sector, impacting the nutrition availability in considered under Sagarmala, will be the country and accounting for analysed and the requisite clearances will approximately 0.5 per cent of India’s total be obtained before the commencement of GDP7, is vital for the coastal districts. And the projects. the 3.9 mn fisherfolk8 (as of 2010), living in 3,288 marine fishing villages spread across Skill development for coastal the Indian coastline, form a critical communities: In addition to the new jobs component of the coastal communities. expected to be generated from port-led industrialisation, substantial manpower will A concerted effort is required to help be required for constructing infrastructure. improve the status of the marine fishermen community on human development indices, Challenges still exist in closing the skill ensuring uniform access to basic demand–supply gap in India. The need is infrastructure such as housing, electricity, not only for fresh skilling but also for up- transport accessibility and healthcare and skilling/re-skilling the existing labour force for promoting sustainable fishery to make it compatible with the changing management. As part of the Sagarmala industry needs. Programme, the CDF and the Sagarmala Development Company (SDC) will provide Considering the above factors, a three- funding grants for marine fishermen– pronged approach for skill development in related social welfare projects, projects for coastal regions is proposed to be adopted generating livelihood opportunities within under the Sagarmala Programme. The first the fisheries sector (e.g., new fish area of focus will be to promote skill processing and value-added product training programmes for job roles related to development, etc.) or outside the fisheries the ports and maritime sector. The second sector (e.g., training in new skills and focus area will be to promote skill training trades in small business development, and livelihood generation programmes (not agriculture, or handicrafts, etc.) and related to the maritime sector) in the projects related to the promotion of coastal districts to expand employment and sustainable marine fisheries management livelihood generation opportunities for the (e.g., sustainable fishery practices, coastal communities and to support promoting aquaculture, spreading fish development of human capital for the quality literacy among fishermen, as well as proposed industrial clusters. The third developing facilities for fish landing and focus area will involve providing access to handling). the training facilities of major ports for third- party skill training programmes in the coastal districts, which will reduce the need to develop new training infrastructure in the coastal areas. The Ministry of Shipping, as part of the Sagarmala Programme, is already undertaking multiple activities/projects across the above mentioned focus areas. 7 ―Indian Marine Fisheries – Issues, Opportunities and Transitions for Sustainable Development‖, World Bank Report, 2010 8 Marine Fisheries Census 2010, India, Central Marine Fisheries Research Institute

Sagarmala (Ministry of Shipping) E x e c u t i v e s u m m a r y xxvii

Exhibit 22 shows the total investment requirement for Sagarmala.

EXHIBIT 22

Sagarmala could mobilise investment1 of about INR 4 lakh cr in Indian infrastructure sector over next ten years

Investment estimates

INR cr, over 2015–25 Skill development and Fishing harbours ~100,000 ~4,00,000 5,000 30,000 Energy clusters 35,000 ~220,000 Materials clusters ICDs 600 40,000 Manufacturing clusters Inland waterways 5,000 5000 Pipeline 50,000 Rail

Road 160,000

Capex at existing ports 65,000 New mega 35,000 ports 30,000

Port Connectivity Port-led Coastal Total modernisation industrialisation community development

Additional investment of INR 7–8 lakh cr in industrial and manufacturing clusters

1 From currently envisaged projects SOURCE:Port masterplanning, Maritime boards and port department of respective states

□ □ □

Sagarmala is an ambitious programme, geared towards making domestic manufacturing and EXIM more competitive and uplifting coastal communities. The programme will have a profound impact and could act as a model for India’s development.

Sagarmala (Ministry of Shipping)